MSME Competitive LEAN Scheme Empowers Small Manufacturers

The government’s introduction of the revamped MSME Competitive (LEAN) initiative has paved the way for affordable consulting services for Micro, Small, and Medium-Sized Enterprises (MSMEs) seeking to reduce wastage in their manufacturing processes. With increased subsidy caps and phased implementation, the initiative can become an all-India initiative, fostering MSMEs global competitiveness. Let’s examine the scheme’s advantages and features in this blog below.

All You Need to Know About the MSME Competitive LEAN Scheme

The primary goal of the LEAN Manufacturing Competitiveness Scheme (LMCS) is to increase the manufacturing sector’s competitiveness. LEAN techniques, like Total Productive Maintenance (TPM), Visual Control, 5S, Standard Operating Procedures, Kanban System, Just in Time, Cellular Layout, and Poka Yoke, are used to identify and eliminate waste, streamline the system, and ensure smooth operation of the entire process. The plan also emphasizes empowering employees to increase their productivity.The scheme provides an increased subsidy cap of 90% on the implementation cost of consultant fees for MSMEs, higher by 80% from the previous costs.

Certain categories of MSMEs receive an additional 5% subsidy, including those in SFURTI clusters, owned by SC-ST or women entrepreneurs, and located in the northeast. MSMEs established through industry associations or Original Equipment Manufacturer (OEM) organizations are eligible for an additional 5% subsidy, which further reduces the implementation charges in the consultant fees.

All MSMEs enrolled through the UDYAM portal of the MSMEs Ministry are qualified to participate in the MSME Competitive (LEAN) Programme and receive any associated incentives. Common Facilities Centres (CFCs) are also eligible for benefits under the Micro and Small Enterprises-Cluster Development Programme (MSE-CDP) and SFURTI schemes.

The objectives of the MSME Competitive LEAN programme are:

  • Reduce reject rates in manufacturing processes
  • Optimize MSMEs’ space utilization
  • Improve the quality of products and processes
  • Increase the efficiency of goods and raw material movements
  • Reduce the price of goods by streamlining operations
  • Minimize resource usage, like energy, water, and natural resources
  • Improve safety in the workplace for employees
  • Develop skills and knowledge in the MSME industry
  • Foster a creative work culture to drive continual growth
  • Promote environmental and social accountability in various MSME operations
  • Increase the profitability of MSMEs by improving their competitiveness
  • Introduce and increase awareness of industry 4.0 technologies and concepts
  • Empower MSMEs with digital technology

Also Read: Will Fintech Lending Dominate Traditional Business?

An Overview of the MSME Competitive LEAN Scheme Methodology

Implementing the LEAN Manufacturing Competitiveness Scheme (LMCS) entails employing LEAN Manufacturing Consultants (LMCs) to evaluate the current manufacturing system of Mini Cluster member units and provide step-by-step procedures for implementing LEAN approaches.
In each cluster, a Special Purpose Vehicle (SPV) will be established, and MSMEs must keep going with the Scheme by using their own expenses from the second year. This is because by the beginning of the second year they would have realized the benefits and cost reductions from LM approaches. The implementation structure consists of three tiers:

  • At the local level – A group of around ten MSMEs (SPV)
  • At the top level – A LEAN Manufacturing Screening and Steering Committee (SSC) under DC(MSME)
  • At the intermediate level – The National Monitoring and Implementing Unit (NMIU)

These are responsible for facilitating the implementation and supervision of the Scheme. The National Productivity Council (NPC) is anticipated to serve as the NMIU of one hundred micro clusters for the Pilot phase.

Adopting these methodologies enables MSMEs to reduce rejection rates and production costs, optimize space utilization, and effectively regulate resources like water, natural resources and energy. Implementing LEAN techniques increases product quality, production and export capacity, and overall profitability.

Implementation stage

Under the programme, MSMEs will receive fundamental, intermediate, and advanced levels of handholding and support. Each level addresses various aspects of the implementation.

Fundamental Level

  • Implementation duration is two months (free of charge).
  • Employees acquire a conceptual understanding of the principles and benefits of LEAN manufacturing through a module that is hosted online on its portal.
  • Topics reviewed include Takt Time, lead time, value stream mapping, resource wastage, 5S, kaizen, value-addition, industry 4.0, visual management, and LEAN six sigma-related concepts.
  • Technical support is accessible online for clarifications.
  • Successful fulfillment of the online evaluation exam leads to certification at the fundamental level.

Intermediate level

  • Implementation time- six months.
  • To attain this level, MSMEs establish a Group of Enterprises.
  • Hand Holding assistance is available on-site.
  • Cost of implementation up to Rs. 1,20,000 per unit.
  • Implementing agencies monitor the implementation of LEAN tools via online and physical evaluations.

Advanced level

  • Implementation time is one year.
  • To attain the advanced level, MSMEs form a GoE.
  • Implementation consists of JIT-Kanban, takt time, cross-functional value stream mapping, line balancing, cellular layout, poka yoke, and low-cost automation.
  • Cost is Rs 2.4 lakh per unit for implementation.
  • Monitoring the implementation of LEAN tools via online and physical evaluations.

Certification & continuation

Upon accomplishment of the advanced level, MSMEs are awarded a LEAN Certificate valid for three years and subject to surveillance audits. To continue receiving the benefits of the programme, MSMEs must reapply. It is essential to note that participation in the scheme is voluntary and is presently available to manufacturing sectors in its 1st phase, with hopes to expand it to the service sector in its 2nd phase.

Characteristics & Advantages of The MSME Competitive LEAN Scheme

Key characteristics and advantages of the MSME LEAN manufacturing scheme include the following:


  • Improve quality, performance, and productivity, to alter the perspectives of manufacturers.
  • Sustained effort to increase MSMEs’ knowledge of LEAN methods of manufacturing, to inspire and to empower them to grow into MSME champions.
  • Small and medium-sized enterprises have the potential to substantially reduce waste, increase productivity, improve quality, work safely, expand their customer base, and eventually grow more profitable and competitive.

The takeaway

The government’s MSME Competitive (LEAN) programme offers inexpensive consulting services to MSMEs in an effort to reduce manufacturing waste. With increased subsidies and gradual implementation, the scheme can potentially increase Indian MSMEs’ global competitiveness by encouraging the utilization of LEAN manufacturing techniques, thereby boosting productivity, quality, and profitability.

MSMEBlog provides expert solutions and guidance for financing MSMEs. For more information on MSME finance, visit MSME Blog website.

Leave a Reply

Your email address will not be published. Required fields are marked *